[kaperoni] “Achieve stability in the exchange rate of the Iraqi dinar in the context of a flexible exchange rate system orbit.”

[kaperoni] Two things are implied here. 1. Monetary policy is changing. 2. They are going to a free float.Read More Link on Right

[kaperoni] The next article also came out in January from a Dr. Naji al-Hamdani titled…

[kaperoni] “Monetary policy and its consequences on the Iraqi dinar.”

[kaperoni] This article is great because he speaks in a high level, often what is taken for granted. Such as this quote…

[kaperoni] “Seen monetary and fiscal policy since 2003 a major shift in the banking sector has taken the Iraqi government some necessary measures derecognition foreign exchange controls and the lifting of restrictions on the movement of trade, capital and support and encourage private companies in the banking sector to move from a system exchange controls system to the open market as one requirements of a market economy. And the Central Bank of Iraq as Iraqi state bank, which formulates monetary policy, he dealt with this policy. Under this approach open to the capitalist West, monetary policy assumes Iraqi currency float and be subject to the law of demand and supply and non-interference in determining the exchange value of the Iraqi dinar against foreign currencies, including the dollar. Currencies cash exposure in the markets as exposure to any items of other commodities which practically leads to monetary instability. Demand and supply that determines the value of the currency. Accordingly, it is expected that the Iraqi currency is exposed to more pressure because of the inflamed political crisis and instability that leads to security stagger markets and rising prices of goods and services and go about asking for more than the dollar.”

[kaperoni] As I break this down, we need to focus on a few keys…

[kaperoni] “…and the lifting of restrictions on the movement of trade, capital and support and encourage private companies in the banking sector to move from a system exchange controls system to the open market as one requirements of a market economy. “

[kaperoni] And this one…

[kaperoni] “Under this approach open to the capitalist West, monetary policy assumes Iraqi currency float and be subject to the law of demand and supply and non-interference in determining the exchange value of the Iraqi dinar against foreign currencies, including the dollar.”

[kaperoni] Now we know 10 years ago, Dr. Shabibi chose a closed monetary policy under Article 14 of the IMF common termed a “currency board.” It’s exactly what that above quote said..”a system of exchange controls.” Where in reality it was a fixed rate (occassional pips) to reduce inflation, etc. to establish a monetary policy, currency and successful exchange rate.

[kaperoni] That time is coming to an end. That must change as stated in the second paragraph above.. “Under this approach open to the capitalist West” Which we know is about to happened because it was stated in the IMF Stand –by-Agreement as a benchmark. And more recently mentioned during the Press Release of the IMF when an extension was granted on June 23rd, 2012 to February 23, 2013 …And that means IMF Article 8 as well.

[kaperoni] Quote…

[kaperoni] “The extension will, in particular, provide time for discussions on fiscal policies for the remainder of 2012 and on measures to improve the functioning of the exchange regime.”

[kaperoni] In my previous chat, I explained that an “exchange regime” is the way an authority (CBI) manages its currency in relation to other currencies and the foreign exchange market.

[kaperoni] So know we all know that the CBI is transitioning off the “currency board” and on to a “free floating” dinar. If you visit the IMF site, you will see various types of “regimes” such as Free Float, Managed Float, or Pegged. Certainly, the CBI may change to more regulated Managed or Pegged, but it appears that the next step is to find the “true value of the dinar” via a free floating platform.

[kaperoni] Now what is interesting is the USAID office in all this…

[kaperoni] A recent article gave us this quote…

[kaperoni] "The U.S. Mission called the 7 banks from across Iraq to attend a training workshop was held for the period of {21-28 of last month}, the first of 20 training workshop will contribute to the support of the banking and financial services."

[kaperoni] And this one…

[kaperoni] The statement said that "the proposed development financial of the U.S. Agency for International Development is the embodiment important for the strategic framework agreement between the United States and Iraq and project envisages support the banking sector to be more vibrant, and this would expand economic opportunities and prosperity for the Iraqi people."

[kaperoni] So we see that the US Strategic Framework Agreement is tied to this training. More specifically because restructuring the financial system is a benchmark not only for this agreement, but for the IMF Stand by Agreement.

[kaperoni] This next quote from a similar article explains even more…

[kaperoni] “Noteworthy that the project to develop the financial sector is an important part of the framework agreement laid out between Iraq and the United States to support the banking sector and increase economic opportunities in the country.”

[kaperoni] These two articles also came out last month…

[kaperoni] Arabic Bank Union: procedures for Central Bank of Iraq is positive towards the development of the banking sector Friday 18 January 2013

[kaperoni] Quote..

[kaperoni] “UAB described Jordanian Arabic nationality medal Ullah, the actions taken by the Central Bank of Iraq in the development of the banking sector as "positive", weighted with the rise of the banking sector during the coming period.”

[kaperoni] See what he said? “the rise of the banking sector”

[kaperoni] And this…

[kaperoni] “the Central Bank of Iraq has good vision and strategic plans are positive and on track towards banking reform to government branches,”

[kaperoni] So much for Maliki’s malarky! (He said yesterday 2/10/2013.. "lack of a stable economic situation" and "lack of clarity fiscal and economic policies.")

[kaperoni] And…

[kaperoni] “the Arabic Bank Union ready to assist and support the development of the banking sector.”

[kaperoni] And this article…

[kaperoni] Member: Finance Committee plans to hold a special conference to develop the banking sector with the participation of international partners 1/22/2013

[kaperoni] And this quote…in which a special conference was held..

[kaperoni] “Special Conference for the development of the banking sector with the participation of international partners and bankers.”

[kaperoni] Let’s add one more bit of fact. That May 22nd 2013 Iraq’s money being held worldwide will no long be protected. Here is a quote…

[kaperoni] "immunity to Iraqi funds will expire in the middle of the month of May next by the United States of America." And this one…

[kaperoni] "the amounts found outside Iraq is $ 65 billion of the Central Bank and other private funds the Iraqi government will be retrieved after the lifting of immunity."

[kaperoni] I also believe the European Union directly after this information came out amended its specific restrictions on economic and financial relations with Iraq. More good news!

[kaperoni] So to summarize, we see..the CBI talking about the “exchange regime” transition, the economist talking about the transition, the IMF stating Feb 23rd as the new deadline, the USAID office training Iraqis in international banking techniques, UAB support, private conferences with both Iraqi and International banks, all of which is part of the both the IMF Stand by Agreement and the US Strategic Framework Agreement. Oh and did I mention if they fail, the 100 billion dollar Paris Debt Agreement could be cancelled?

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